The Charlotte30 Interview

Hi everyone, hope you enjoy this interview from Charlotte30!

...and I don't think I agree with the "not spectacular" bit at the end!

1. How did you get involved in property?

Wanting a larger PPR as the family grew. To afford it I had to owner build. Huge learning curve and I loved it. Especially after it was valued.

2. What is your property investment philosophy/strategy (CF, CG, renos, houses, flats, buy and hold, develop, flip, wrap, etc)?

Build, develop and reno. All buy and holds. I use a Line of Credit for finance that gives me more flexibility. I do use one bank and cross collateralize which goes against the recommendations on this board. However the bank has only 4 IP?s as security out of a total of 8..

3. What is your IP / property story so far?

Started off with PPR. Built 3 before I realized that this was not the best use of funds. They gained in value but it was more about my ego rather than good use of capital.

So, I made a plan to become a millionaire in property.

2002 Decided to sell PPR and purchase investment properties within 1 km of city instead of living in the suburbs.

2003 Built more modest PPR, behind an old house near the city and also Bought IP 1

Apr 2005 Purchased IP2 demolished house, built 2 ? 2bdr apartments (IP 2 & 3)

Nov 06 purchased IP 4 ? old house with land to build behind

These were Boom times, therefore gained a lot of equity

2007 Demolished IP 1 and built 2 apartments (IP 5 & 6) 2-2 bdr apartments
Market started to go backwards during that build. Time to consolidate.

2008/09 tax year portfolio became cashflow positive

2010 Built PPR behind IP 4 kept 1st PPR as a rental

Earthquakes happened. Required consolidation as values had fallen and everything was uncertain. There were some good bargains to be had for the brave and cashed up.

2012 Purchased IP7, renovated within 3 months. This was bulldozer material and uninsured- has enough land to build another house behind. Had to get an Engineers report to get it insured.

Total of 7 Ips 1 PPR at 2012

Current ? Oct 2014 bought IP8, an old house in 4 1 bedroom flats that had not been renovated for 30 years. It is in central city, high density land (1100 sqm). This will be cashflow positive once tenanted. At that point I will have a six figure net income from rentals

4. Is there a story of a really good IP that you would be prepared to share with us?

PPR that is now a rental has trebled in value and rents for $450pw. Now 12 yrs old

5. Is there a story of a really bad (or not so good) IP that you would be prepared to share with us?

Not so good IP?S are the apartments. After building they gained instant equity of 50% of cost but slow growth in the ensuing years.

6. Do you invest in other asset classes (shares, commodities, businesses, managed funds, cash, forex, etc)?

Managed funds, cash

7. What criteria do you use when selecting a property to purchase and/or renovate?

Has to be cashflow positive by renovating and/or have an upside of land to build on.

8. What structure do you use for your investing?

Family Trust

9. What is your strategy to fund your lifestyle in the future (eg Live off Rent, Live off Equity, Live off something else?.)?

Live off rent.

10. If a budding property investor asked "what are the top 5 things I should do", you would say?

1. Ask an experienced investor, if you were my age now what would you do in the current market?

2. Ask yourself what do you want and work backwards from there. Ie work out how to get there

3. Do what you can with what have. Ie I have x amount of dollars what can I do with this? Try some Wotif scenarios. When I complete this what will be my financial position?

4. Have a 1yr, 5yr and 10 yr plan. Review annually

5. Always have options if the proverbial hits the fan.

11. And if that same budding investor asked "what things should I avoid", you would say?

1. Joint ventures

2. Organizations that want to do everything for you. Comes at a cost, not just financial and will not teach you anything.

12. And in a slightly different vein - what would you advise the property investor who maybe has a portfolio of properties, but is at a loss as to how to proceed?

Ask your self what do I want? What options do I have?

13. How important is planning to being a successful investor?

Everything. Without planning there is no action, no result. A little bit at a time is all you need.

14. Do you consider that there is any natural progression for an investor? (eg. From owning a few properties, to owning many, to being a developer, joint ventures, commercials)

Yes. As you know more you will open your eyes to other opportunities.

15. Do you have any thoughts on the CF vs CG debate or on the issue of metro vs regional, units vs houses?

Both CG and cashflow are important. CashfIow pays the bills and capital growth allows you to borrow more money. have made the most capital growth from town houses near the centre of the city. I Prefer metro to regional for the growth. Neither is better just different.

16. What do you prefer, fixed or floating interest rates and why?

Mixture of both. I use floating on my line of Credit. Then when project is finished I take funds from line f credit and place on a fixed term loan. This does not necessarily mean the property has been used for security rather it is my allocation of the funds. No more than 2 years. I have been caught before when fixing for a longer term and then interest rates dropped.

17. How important in your life is having a partner and other family members who are ?into property??

Critical. It helps clarify thinking when you develop ? speed wobbles?. Meeting other investors is useful. I don?t have a partner do rely on friends, family.

18. Finally, where do you see the market at the moment and do you think the current environment is making it harder for newer investors than when you started? Your thoughts on the next 1 year, 5 years, 10 years?

It?s anyone?s guess. The market will move all over the place. Experience enables you to see bargains.

Final thoughts:
My progress has not been spectacular compared to others but it can be done on a low income. Financial independence was the goal.